PROGRAM BUDGETING AND PERFORMANCE MANAGEMENT IN
FRANCE: THE 2001 REFORM OF THE CONSTITUTIONAL BYLAW
Frédéric Bobay^1 (Ministry of Economy, Finance and Industry France)Paper completed: May 20051. Introduction: A thorough, multipurpose budget reform, initiated by
Parliament with a political consensus
The reform of the constitutional Bylaw on budget acts, the “LOLF - Loi Organique relative aux lois de
Finance”, was adopted on August 1, 2001. It overrides the former 1959 legal framework of a similar kind
and is due for initial implementation for the preparation of the 2006 budget act.
This budget reform has been essentially initiated by the Parliament and adopted on the basis of a political
consensus and a broad support from political parties. During the 1998-2000 years, the Parliament
engaged in budget process analysis, with a focus on transparency and performance and specific concerns
with respect to rebalancing appropriation powers and enhancing expenditure efficiency.
It followed some dissatisfaction with the functioning of the former budget framework which showed
excessive rigidities, lack of accountability, and no explicit consideration to expenditure performance or
even purpose. Furthermore, besides the general principle, the Parliament tended to resent its rather
limited power over the appropriation process, as only a share of the annual budget was in practice up for
political scrutiny and amendments due to the entitlement constraints.
As a result, the new constitutional Bylaw is a thorough reform encompassing the whole budget
framework. Nearly all aspects have been significantly revised, from its very appearance and format to the
appropriations rules. It thus established a new incentive and control framework for the various
participants to the budget process (parliamentarians, ministers, heads of administration departments).
Enhanced transparency and accountability are also key components, also with respect to improving
accessibility and readability of budget documents by the public at large. In that context, a new public
finance accounting standard has also been decided, with a shift to accrual accounting.
The new constitutional Bylaw also provides for an increased autonomy of the administration when
implementing the budget. For this purpose, the rules regarding expenditures management have been
renewed with the introduction of the ‘globalization of means’ approach. Under this new framework, the
administration is authorized to reallocate elements of funding during the year, without prior authorization
from the Parliament. However, the administration’s performance is up for due reporting to and
examination by the Parliament in the following year.
This paper focus on the core innovation of the new constitutional Bylaw regarding budget appropriation
and implementation, without covering every aspects of the reform such as changes in the accounting
(^1) Direction Générale du Trésor et de la Politique Economique. Prepared with assistance from Direction de la Réforme
Budgétaire and Direction du Budget. For more information: http://www.moderfie.minefi.gouv.fr